Why Did The Penn Central Railroad Fail?

The Penn Central was born amid great expectations and promises on February 1,1968 by the merger of the New York Central System into the Pennsylvania Railroad on that date.

Neither railroad had been forced through the trauma of bankruptcy and reorganization.

With incompatible computer systems ,signal systems, operating styles, and personalities at the top, the new railroad remained essentially two in operation though it was one in name.

1.) PC was forced to pay $125 million for the bankrupt New Haven, which had a negative cash flow.

2.) PC was required to operate well over one half of all the passenger service in the US, which by that time had a monstrous negative cash flow. Amtrak only partly relieved this in 1971, as PC was still saddled with commuter service in the New York and Philadelphia areas.

4.) The “red” and “green” teams were more interested in “oneupmanship” than creating a viable enterprise. No thought had been given prior to the merger, for example, on compatibility of computer reporting systems.

The merger between the New York Central RR and the Pennsylvania RR was like a shotgun wedding. Both bride and groom hated each other. Yet, there was no other option but to join hands in unholy matrimony, and if this wasn’t bad enough, the bride and groom had to accept the New Haven RR as an unwelcome boarder in their honeymoon suite.

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